Paper: Deal emerging to resolve Pa. capital woes

By The Associated Press

Saturday, April 27, 2013

HARRISBURG, Pa. ­— A newspaper says a deal appears to be emerging to resolve the multimillion-dollar debt crisis of Pennsylvania’s capital stemming from a city-owned municipal trash incinerator without the city having to declaring bankruptcy.

The (Harrisburg) Patriot-News (http://bit.ly/Z3PpBj ) said a series of interviews with a state-appointed receiver and other officials in Harrisburg indicates that the framework would involve selling the incinerator to the Lancaster County Solid Waste Management Authority. It would also mean entering a 40-year-plus public-private partnership with Standard Parking, which runs Harrisburg International Airport garages, to lease city lots and garages.

The plan would also entail convincing many stakeholders to agree to walk away from some of the money they contend they are owed. And Harrisburg would have to deal with aging and crumbling infrastructure, provide economic development funds and set up a trust fund for an underfunded program that provides benefits for city workers after retirement. But the paper says the money would not ease the pressure for the city to continue to live within its means.

State-appointed receiver Gen. William Lynch, his financial adviser Steven Goldfield and Mayor Linda Thompson told the paper that nothing is final, but they believe they are close to a “handshake deal” that could lead to court review and approval.

“Our initiative is to create conditions that allow city government to be successful,” Lynch said. “And we believe this proposed solution is as good as it’s ever going to be. I sometimes shake my head (thinking), ‘How could you possibly consider the alternative to this?’ which is bankruptcy — which we don’t think is good for anybody.”

To deal with structural debt issues apart from the incinerator, Thompson cites a 20 percent cut in the workforce and expenses reduced by 10 percent. The city has also started selling off some public works equipment in preparation for privatizing waste collection and is looking at its vehicle fleet. Officials also increased the earned income tax for residents from 1 percent to 2 percent.

In addition, Harrisburg officials are still seeking $4 million in annual union concessions, and Goldfield said environmental regulators will need to compromise on potential fines based on past practices and surrounding towns would have to agree to regionalize some services and infrastructure.

The city about 50,000, devastated by the loss of its heavy manufacturing core, has been struggling with millions of dollars of debt from the incinerator, with the total debt most recently estimated at $370 million.

The city had already piled $100 million in debt onto the incinerator by 2003 when the city council approved an expensive retrofit of the aging and polluting facility as an alternative to shutting it down. However, the retrofit went awry and lasted much longer and became much more expensive than originally forecast. Harrisburg city residents now pay among the highest trash-disposal rates in the nation, while the facility can’t generate nearly enough money to pay the debt.